A global shift towards relying on private savings, and away from state provision, should be positive for the financial sector – but the shift is neither uniform nor rapid, and developing nations are sure to favour their domestic financial industries first.

All else being equal, private pension funds help to develop domestic capital markets, and are usually willing local buyers of government debt. They also help guard citizens against the risk that future governments will change the rules – a point that some UK public-sector pensioners, whose incomes were cut in 2011 after the government tied them to a lower rate of inflation, can appreciate.

Elizabeth Corley, chief executive of Allianz Global Investors, one of the world’s biggest fund managers, said: “On a long-term view, there is a structural shift towards private occupational pensions. For our industry, pensions and retirement savings are definitely an area of growth.”

According to research by Allianz, state provision is shrinking in almost all developed economies. Corley said: “Even if you look at Germany and France, which are close to the top of the league table for state spending on pensions, it has reduced.”

In Germany, the state pension system accounted for 78% of average retirement income in 2000 but, by 2010, this had fallen to 70%. In France, it dropped from 80.6% to 73.2% in the same period.

Some governments are even making private pension savings compulsory. In Australia, occupational DC schemes became mandatory in 1992. All employees currently pay in 9% of salary and this is being gradually increased to 12% by 2020. As a result Australia has built up pension funds worth A$1.6 trillion, around the same size as the country’s GDP – a total predicted to grow to 180% of GDP by 2033. Others are now following Australia’s lead, notably the UK.

Such vast pools of assets represent an obvious business opportunity for asset managers. There is a similarly large opportunity for insurers as well, because DC pension pots are usually converted to insurance contracts called annuities upon retirement. Steve Webb, UK minister for pensions, told Financial News in September: “We are putting six to nine million people into DC pensions over the next five years, so there will be a hell of a lot of annuitisation going on.”

Webb is pressuring UK insurers to facilitate greater shopping around in the annuity market, and considering fee caps for asset managers running the money. Stricter regulations for providers are also being introduced in Australia.

Some previous pensions privatisations have not worked out as planned. Argentina renationalised its system in 2008, Hungary did so in 2010.

In the past few months, Poland has embarked upon a similar move – though it stopped short of full renationalisation. In February, it will cancel all Polish government bonds owned by pension funds – about 51% of their assets. The remainder, invested in equities and other forms of debt, will remain with the private sector funds and managers.

Dariusz Stanko, of the International Organisation of Pensions Supervisors, said these moves did not amount to “stealing” pension assets, because they have effectively been replaced with paper “IOUs”. The Polish reform will reduce public debt by about 8% of GDP, he said, but will also increase reliance on foreign lenders, who now account for a larger part of the bond market.

According to Michael Herrmann, economic adviser to the UN Population Fund, privatisation might not even be economically necessary everywhere. He said: “I am not a big fan of completely private systems. In some countries, schemes are only buying domestic government bonds, so why have a private system at all? The only people to benefit are the intermediaries.”

Herrmann argues that public pay-as-you-go systems can stay affordable even as longevity rises, provided the country’s output per worker grows faster than the number of pensioners per worker. He said that, on this basis, “Germany and Japan can finance their ageing populations – but Portugal, and Greece, and Italy, and Spain might struggle”.

Some countries have reformed public pensions without involving the private sector. Italy embarked on a radical restructuring in 2011, moving the state system to a model known as “notional DC”, a pay-as-you-go system that reduces payouts if life expectancy keeps increasing.

For the finance industry, the largest potential opportunity lies in the emerging markets. The two population giants, India and China, are both moving in the direction of funded, invested pension schemes – but progress is likely to be slow.

China introduced a funded element to its state system for urban workers in 1997, with contributions worth 8% of salary diverted into individual DC accounts. About $394 billion has been saved in this system so far, according to Hong Kong-based consultancy Stirling Finance. Despite problems with some provincial governments “raiding” the accounts, they could be worth as much as $1.8 trillion by 2030.

Stuart Leckie, chairman of Stirling Finance, said: “Currently, individual account assets have to be invested in Chinese government bonds or bank deposits. We have argued for a long time that they need to get exposure to real assets. Our solution is they should permit up to 15% of the money to be invested into ETFs or index funds, invested in the Chinese stock market.”

The Chinese system also includes a $175 billion reserve fund, known as the National Social Security Fund. This is intended to act as a model for pension investment in China, and has begun employing some foreign fund managers in order to invest abroad, as well as taking on the management of individual-account money from several provinces.

India, meanwhile, reformed its civil service pension scheme into a DC arrangement, known as the National Pension System, in 2004, and began offering it to non-government workers in 2009. The government offers a 1,000-rupee ($16) incentive known as the Swavalamban Scheme to encourage the poor and rural workers to contribute.

The NPS now has about five million members and about $5 billion under management. According to Kavim Bhatnagar, a former Indian civil servant who helped design the system, its investment rules are being liberalised. The eight authorised NPS fund managers are all India-based groups, and must contend with management fees capped at 0.25% of assets. But DSP BlackRock Investment Managers – a joint venture between BlackRock and the local financial group DSP – joined the list in October last year.

Allianz Global Investors’ Corley said: “It’s quite right that emerging economies should want to stimulate their local industries first, rather than have it all go offshore. We will always be competing with local players.”